Cost-Effectiveness of Targeted Reemployment Bonuses

Authors

Christopher J. O'Leary, W.E. Upjohn Institute for Employment ResearchFollow
Paul T. Decker, Mathematica Policy Research
Stephen A. Wandner, U.S. Dept. of LaborFollow

Upjohn Author ORCID Identifier

https://orcid.org/0000-0002-3372-7527

Publication Date

8-1-2003

Series

Upjohn Institute Working Paper No. 03-51R

**Published Version**

In Journal of Human Resources 40(1): 270-279

DOI

10.17848/wp03-51R

Abstract

Targeting reemployment bonus offers to unemployment insurance (UI) claimants identified as most likely to exhaust benefits is estimated to reduce benefit payments. We show that targeting bonus offers with profiling models similar to those in state Worker Profiling and Reemployment Services systems can improve cost effectiveness. Since estimated average benefit payments do not steadily decline as the eligibility screen is gradually tightened, we find that narrow targeting is not optimal. The best candidate is a low bonus amount with a long qualification period, targeted to the half of profiled claimants most likely to exhaust their UI benefit entitlement.

Issue Date

August 2003

Note

An update of W.E. Upjohn Institute for Employment Research staff working paper no. 98-51, issued in 1998 under the title Reemployment Bonuses and Profiling.

Sponsorship

Funding provided by Mathematica Policy Research, the W.E. Upjohn Institute for Employment Research, and the U.S. Dept. of Labor.

Subject Areas

UNEMPLOYMENT, DISABILITY, and INCOME SUPPORT PROGRAMS; Unemployment insurance; Worker profiling; WORKFORCE DEVELOPMENT; Labor exchange